John Barendrecht Sunday, Jun 1, 1997 9:33 PM
Respond to of 79857
Monsoons, marriages and markets -
Sunday June 1 7:33 AM EDT
Dubai gold market in soft start to June
DUBAI, June 1 (Reuter) - Business in Dubai's downtown gold souk started June on a soft note, with traders saying that sentiment was dragged down by seasonally weak regional demand.
But they said on Sunday that any sign of an early monsoon in India or a fall in the international gold price below $340 an ounce could revive Indian investor interest.
``This week, in general, was even more dull than the last,'' said one dealer active in the local retail market and the re-export business to India, the world's biggest gold consumer.
With the end of the marriage season and ahead of the monsoon in India, traders said overall demand from the subcontinent was below levels seen a month ago. But some said investment demand from India was evident at around $340 an ounce.
``At the lows we are seeing good investment demand, but people are still waiting for the monsoon before they buy,'' said one.
India, a predominantly agriculture-based economy, largely depends on the June-September monsoon season for crop growing. Early rains are seen as an indicator of good gold demand.
In the local retail market, dealers said the summer heat was keeping many customers away from the souk and the weaker trend was expected to continue until late September.
Shop owners said demand from Russian tourists was showing signs of decline, which they said customers attributed to recently stricter enforcement of import duties in Russia.
``The business from Russian tourists is falling because the percentage of duty in Russia has increased recently,'' said one.
In May, Russia said it was working on an emergency programme to raise additional revenues of 30 trillion roubles for the 1997 budget. About half of that would be made from better collection of excise duties and customs tariffs.
The Russian finance minister had also said a new approach to the precious metals and stones market would contribute funds.
But one trader discounted any large impact on the local market. He said most Russian tourists to Dubai bought mainly lightweight 18 and 16 carat Italian pieces, rather than the more valuable, heavier jewellery with higher gold content.
This spared, to some extent, the Dubai market from the effects of any new Russian policy on import duties, he said.
In line with higher world bullion prices in the week, Dubai prices edged up. The benchmark ten tola bar was quoted at 4,765 dirhams ($1,298) on Sunday from 4,738 dirhams ($1,291) a week earlier. The ten tola bar is 3.746 ounces of 24 carat gold.
On the international spot market, gold was last quoted on Saturday at $344.70/345.20 an ounce from $342.50/343.00 a week earlier.
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